Key Decisions

February 2013 – A Settlement Offer Was Reasonable

(filed under: Key Decisions | February 22, 2013)

A Settlement Offer Was Reasonable

Whatley-Miller v. Cooper
(Cal. Ct. of App., 2d Dist.), filed January 15, 2012 

KEY FACTS

Thomas Miller died on December 8, 2006.  On February 22, 2008, his widow, Susanne Whatley-Miller, and his two daughters, Holly Elizabeth Miller and April Ann Miller, filed a complaint for medical negligence and wrongful death.

On June 20, 2008, plaintiffs served Dr. Collin Cooper with an offer to compromise pursuant to Code of Civil Procedure section 998.  In it, plaintiffs agreed to resolve all claims against Dr. Cooper for $950,000 with each side to bear its own costs.  At the same time, plaintiffs served Dr. Cooper with a document entitled “Acceptance of Plaintiffs’ Offer to Compromise Pursuant to [Section] 998 and Civil Code [Section] 3291.”  It provided:  “The Clerk of the Court is hereby authorized and directed to enter Judgment against [Dr. Cooper] on the Complaint of Plaintiffs . . . in the amount of NINE HUNDRED FIFTY THOUSAND DOLLARS ($950,000.00) pursuant to Plaintiffs’ Offer to Compromise which is attached hereto.  Costs to be submitted pursuant to cost bill filed by plaintiff[s] within ten (10) days after entry of said Judgment.”  Under this recital was a place for the signature of Dr. Cooper’s attorney and the date of signing.

Dr. Cooper did not accept the offer.

Plaintiffs prevailed at trial.  They then filed a memorandum of costs.  It included expert fees of $108,191.  It also included prejudment interest from June 20, 2008, the date of the compromise offer, through April 29, 2011.

Dr. Cooper filed a motion to strike and tax costs.  He asserted that the compromise offer did not meet the procedural requirements of Section 998, which required that the one making the offer include a form for the responding party to sign if it is accepted.  He also argued that because the offer was made only two months after the lawsuit was filed, it was not a good faith offer.  Dr. Cooper also argued that expert fees were not recoverable because the court had not ordered that the parties engage experts.

The trial court denied Dr. Cooper’s motion.

HOLDING & REASONING

The Court of Appeal affirmed.

The California Judicial Council has made available a form setting forth the elements of an offer to compromise and an acceptance under Section 998.  Although using this form may be for the convenience of the litigants, Section 998 makes it clear this form is not the one and only way to comply with the offer and acceptance requirements of that statute. Compliance with the procedural aspects of Section 998 may be satisfied by an offer of compromise that includes a statement of the offer and a separate document of acceptance that is to be signed by counsel for the accepting party, or the accepting party if not represented.  Accordingly, the plaintiffs’ offer complied with Section 998’s requirements.

Regarding whether the offer was in good faith — to be in good faith, the offer must carry with it some reasonable prospect of acceptance.  Whether the offer is reasonable depends upon the information available to the parties as of the date the offer was made.  Generally, reasonableness “is measured, first, by determining whether the offer represents a reasonable prediction of the amount of money, if any, defendant would have to pay plaintiff following a trial, discounted by an appropriate factor for receipt of money by plaintiff before trial, all premised upon information that was known or reasonably should have been known to the defendant.”

The court found that the trial court did not abuse its discretion in finding that the offer was reasonable because in its written ruling, the trial court laid out in considerable detail information regarding Miller’s annual income and the financial impacts of his death that had been provided to Dr. Cooper before the plaintiffs made their offer.  The trial court also pointed out that the offer was within Dr. Cooper’s insurance policy limits.  Moreover, Dr. Cooper did not seek additional time to consider the offer.

ANALYSIS

This case demonstrates both the importance of following the rules when making an offer to compromise under Section 998, and of making an offer that is reasonable and carries with it the potential of being accepted.